thanks c1apton & 94bmw325i, I hope that a bottle of K-Seal will cure the gasket, if not then this will be an expensive week! The annoying thing is that when it was MOT'd last week, it was failed on a leaking power steering pump....which was BS because I know my car & there was no PS leak. When I complained the garage just issued me with a pass certificate and told me to fix it! It was actually a small amount of green coolant leaking from the block onto the Power Steering pump...if only they'd spotted this instead of assuming the obvious...the fact that my coolant was bright green and the PS fluid was red didn't seem to bother them!
I will replace the water pump (even if it's ok) and the thermostat, and see what happens with the K-Seal. Apparently it can be used to 'permanently' plug holes under 1mm. Fingers crossed. Cheers